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3 Reasons the U.S. Natural Gas ETF Will Get Hot by This Winter

Tickers in this article: RDS.B UNG XOM

NEW YORK ( TheStreet) -- When it gets cold, that's the time for natural gas , as represented by the United States Natural Gas exchange-traded fund, to get hot.

UNG has had its ups and downs this year. But here are three reasons why it should jump later as winter weather arrives.

Cold, bitter weather is predicted, just like last winter, when natural gas prices were driven higher. The Farmers Almanac "is predicting another nasty and frigid winter in the Northeast." Last year, United States Natural Gas went from under $17 a share in November to nearly $27 in April due to "nasty and frigid weather."

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UNG stock is up only 1.59% for the year to date but down 16% for the past six months. The stock closed Wednesday at $21.02, up 10.9% over the past 52 weeks.

There is still not enough pipeline infrastructure to prevent a price rise due to increased demand.

Yes, there is plenty of natural gas in the U.S. But it is still in the ground, chiefly in Pennsylvania's Marcellus Shale. There's a lack of pipeline infrastructure to get it to the end user.

Of the 8,000 wells in the Marcellus Shale , which supplies 40% of shale gas production, about 3,000 are idle. About one-half of those not pumping could be put in production if the pipeline infrastructure existed to get the product to market.

Those 1,500 wells could do much to get natural gas out to consumers and companies this winter when demand spikes. But it is not going to happen this winter.

Investors and speculators will drive up the price even more, just like last winter -- but with a major difference.

The change is that Big Oil is selling assets around the globe and moving prominently into the Marcellus Shale. Royal Dutch Shell , the second-largest energy firm in the world, is pulling back from Africa and other areas to go into the Marcellus Shale in a significant way.

The biggest oil and natural gas firm on the planet, Exxon Mobil , recently announced the leasing of 170,000 acres in West Virginia to tap into the southern tier of the Marcellus Shale formation, with more local acquisitions planned. Wood Mackenzie, an energy consulting firm, just released a report saying that there was $90 billion left to be earned in the Marcellus Shale.

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Big numbers like $90 billion and big names like Exxon Mobil and Royal Dutch Shell mean even more investment dollars flowing into the Marcellus Shale. That will naturally increase the price of natural gas stocks, ETFs, mineral rights and so on, due to the fundamentals of supply and demand.